What is "mutual insurance"

Mutual \Mu"tu*al\, a. [F. mutuel, L. mutuus, orig., exchanged, borrowed, lent; akin to mutare to change. See Mutable.]

1. Reciprocally acting or related; reciprocally receiving and giving; reciprocally given and received; reciprocal; interchanged; as, a mutual love, advantage, assistance, aversion, etc.

   Conspiracy and mutual promise.
   --Sir T. More.

   Happy in our mutual help, And mutual love.
   --Milton.

   A certain shyness on such subjects, which was mutual between the sisters.
   --G. Eliot.

2. Possessed, experienced, or done by two or more persons or things at the same time; common; joint; as, mutual happiness; a mutual effort.
   --Burke.

   A vast accession of misery and woe from the mutual weeping, and wailing, and gnashing of teeth.
   --Bentley.

   Note: This use of mutual as synonymous with common is inconsistent with the idea of interchange, or reciprocal relation, which properly belongs to it; but the word has been so used by many writers of high authority. The present tendency is toward a careful discrimination.

   Mutual, as Johnson will tell us, means something reciprocal, a giving and taking. How could people have mutual ancestors?
   --P. Harrison.

   Mutual insurance, agreement among a number of persons to insure each other against loss, as by fire, death, or accident.

   Mutual insurance company, one which does a business of insurance on the mutual principle, the policy holders sharing losses and profits pro rata.

   Syn: Reciprocal; interchanged; common.

A mutual insurance company is an insurance company owned entirely by its policyholders. Any profits earned by a mutual insurance company are rebated to policyholders in the form of dividend distributions or reduced future premiums. In contrast, a stock insurance company is owned by investors who have purchased company stock; any profits generated by a stock insurance company are distributed to the investors without necessarily benefiting the policyholders.

The concept of mutual insurance originated in England in the late 17th century to cover losses due to fire. The mutual/casualty insurance industry began in the United States in 1752 when Benjamin Franklin established the Philadelphia Contributionship for the Insurance of Houses From Loss by Fire. Mutual property/casualty insurance companies exist now in nearly every country around the globe.

The global trade association for the industry, the International Cooperative and Mutual Insurance Federation, claims 216 members in 74 countries, in turn representing over 400 insurers. In North America the National Association of Mutual Insurance Companies (NAMIC), founded in 1895, is the sole representative of U.S. and Canadian mutual insurance companies in the areas of advocacy and education.